The contemporary Employer of Record service (EOR) is so much more than just “payrolling”. In fact, there are some pretty excellent workforce management strategies to which an EOR can be applied with great - often cost saving – results. Here are some of the workforce management activities and strategies to which an Employer of Record service adds significant value.
Employer of Record services provide organizations a platform for engaging pre-identified, legacy, and self-recruited contractors. An organization could invest capital into a VMS tool and man-hours for purposes of collecting worker data, configuring business rules to respect tenure structures and avoid co-employment, thus developing a pipeline of re-engaged talent. Or, the organization could simply outsource these processes to an EOR service which performs this important legwork as a matter of course. The EOR’s “platform” represents a lower-cost option for organizations to manage their flexible workforce.
As an organization re-engages the same contractors for separate projects - as long as the EOR has the technology and know-how - a re-deployment strategy can be put in place to further leverage these “known” workers and reduce the usage of recruited resources. This also provides a cost savings/reduction.
When organizations put a tenure policy in place for all contract workers engaged more than X months, and those workers are then moved to an EOR provider at the end of the X-month engagement, cost savings are captured from the reduced mark-up typically delivered by an EOR provider.
Another function the EOR service often performs at less cost than the traditional staffing agencies is the provision of a “try before you buy” type service for sourcing full-time workers. Unlike the staffing agency, the Employer of Record service delivers a contract worker with all the required tax and insurance burdens met on arrival. If the customer wishes to engage a particularly adept worker as a full-time employee, the EOR charges no direct hire conversion fees typically collected by a staffing agency. Moreover, this level of flexibility provides companies typically disrupted by massive swings in supply and demand with a flexible workforce that can be implemented quickly when needed, and then off boarded with minimal disruption.
Traditional staffing companies also offer many of these services, but frequently at a higher cost to the client organization. The EOR service can provide these services for less because they specialize in these specific functions, and specialized companies always tend to be more efficient because they perform with less operational bloat.
This post provided by nextSource contributing writers, Jarret Gardner, VP of Business Development, and Anton Robb.